If you rent out a property in Italy—even occasionally through platforms like Airbnb or Booking.com—you may be subject to a 21% withholding tax on your rental income. This tax is part of a regulatory framework designed to ensure tax compliance among short-term rental hosts, both resident and non-resident.
But what does this 21% withholding really mean for your tax obligations? And how does it relate to your annual Italian tax return (Modello Redditi or Modello 730)? Here’s what property owners need to know in 2025.
What Is the 21% Withholding Tax?
The 21% withholding tax (ritenuta d'acconto del 21%) is a flat-rate tax applied to gross rental income earned from short-term leases—typically defined as stays of up to 30 days. The tax is withheld at the source by intermediaries, such as:
- Airbnb
- Booking.com
- Italian property managers or real estate agents who collect rent on your behalf
This means that when a guest books your property, 21% of the rental income is automatically retained by the platform or agent and sent directly to the Agenzia delle Entrate (the Italian Revenue Agency).
Who Is Affected?
This withholding tax applies to:
- Italian tax residents who earn income from short-term rentals.
- Non-residents (e.g. U.S. citizens) who own property in Italy and rent it out, even occasionally.
If you list your property on Airbnb, Booking.com, or any other platform acting as a “qualified intermediary,” you will likely be subject to the withholding unless you have opted for a different tax treatment (explained below).
Relationship to Annual Tax Filing in Italy
Many foreign property owners mistakenly believe the 21% withholding is the final tax they owe. This is only partially correct, depending on your individual tax situation.
There are two primary tax regimes for rental income in Italy:
1. Cedolare Secca (Flat-Rate Regime)
- A simplified tax regime with a 21% flat rate for short-term rentals (or 10% in certain cases, such as long-term contracts in municipalities with housing shortages).
- If you opt in to Cedolare Secca, the 21% withholding by Airbnb or Booking.com serves as your final tax—you don’t owe anything more on that income.
- However, you are still required to file an Italian tax return, especially if you're a non-resident. This is crucial to declare income and claim the correct treatment.
2. Ordinary Tax Regime (Progressive Rates)
- Rental income is added to your total income and taxed at progressive rates (23%–43%).
- The 21% withholding is considered an advance payment and can be offset against the final amount due in your tax return.
What If I’m a U.S. Citizen or Non-Resident?
Non-residents—especially Americans—often have a tax treaty with Italy (like the Italy-U.S. tax treaty) that can impact how your rental income is taxed. However, regardless of treaty benefits, you are generally still required to:
- File an Italian tax return
- Report the rental income, even if tax was withheld
- Elect the tax regime (Cedolare Secca or Ordinary) during filing
Failing to file a return can result in penalties—even if tax was already withheld.
Additional Considerations
- Platforms like Airbnb and Booking.com are required by Italian law to act as tax intermediaries. However, the actual enforcement and withholding may vary, particularly for Booking.com, which has historically faced challenges in complying with these regulations.
- Some property owners bypass platforms by collecting rent directly. In these cases, you must self-manage the tax payments, including possible advance payments (acconti).
- Non-residents may also be liable for IMU (property tax) and must consider their overall worldwide income when planning tax strategy.
Key Takeaways
- The 21% withholding tax applies to gross income from short-term rentals in Italy and is generally withheld by platforms like Airbnb and Booking.com.
- Filing a tax return in Italy is still required, even if tax was withheld.
- You must elect your preferred tax regime (Cedolare Secca or ordinary) when filing.
- This tax applies to both Italian residents and foreign property owners, including U.S. citizens.
- Non-compliance can lead to penalties and missed opportunities for optimization (e.g., offsetting expenses or tax credits under a treaty).
Need Help Filing?
Platforms like ItalianTaxes.com offer expert guidance and bilingual support for foreign property owners who need to file Italian tax returns, ensure compliance, and understand their cross-border tax obligations.
Frequently Asked Questions:
❓ What is the 21% withholding tax in Italy for rental income?
The 21% withholding tax is a flat-rate tax applied to short-term rental income earned in Italy. It is withheld by platforms like Airbnb and Booking.com and remitted to the Italian tax authority (Agenzia delle Entrate) on behalf of the property owner.
❓ Does the 21% withholding tax apply to all types of rentals?
No. It specifically applies to short-term leases (up to 30 days) where hospitality services are not provided, and the booking is managed by an intermediary (e.g., Airbnb, Booking.com, or a local agent).
❓ Is the 21% withholding tax the final tax I owe?
It depends.
If you opt for the Cedolare Secca flat-tax regime, the 21% withholding generally satisfies your tax obligation. If you are under the ordinary tax regime, the withholding is considered an advance, and you must reconcile your taxes via your annual return.
❓ Do I still need to file a tax return in Italy if the tax was already withheld?
Yes. Even if tax was withheld, non-residents and residents alike must file an Italian tax return (usually Modello Redditi) to report rental income and confirm the correct tax treatment.
❓ What happens if Airbnb or Booking.com doesn’t withhold the tax?
If the platform or intermediary does not apply the 21% withholding, you are personally responsible for paying the tax and reporting the income in your Italian tax return. Failing to do so can result in penalties and interest.
❓ Can non-residents, like U.S. citizens, use Cedolare Secca?
Yes, non-residents can generally opt for Cedolare Secca on rental income, provided the lease qualifies. You must declare this in your Italian tax return. Treaty benefits (such as the Italy–U.S. tax treaty) do not override your obligation to file.
❓ What if I rent out my Italian property directly to guests?
If you rent directly—without using a platform or intermediary—you must:
- Collect and report the full rental income
- Choose your tax regime (Cedolare Secca or ordinary)
- Make any required advance payments during the year
❓ What documents do I need to keep?
You should retain:
- Rental contracts
- Booking confirmations
- Payment records
- Platform-generated tax summaries (e.g., from Airbnb)
- Your annual Italian tax return and related forms
❓ Where can I get help filing my taxes in Italy?
You can consult a local commercialista (Italian tax advisor) or use trusted online platforms like ItalianTaxes.com, which offers expert support in English for non-resident property owners.
